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CASE 14-1 SEAL RITE ENVELOPE COMPANY (A) Analysis of Sales Volume Y ou're drowning in data. Haven't you anything was delivered to her email account each Sunday better to do around here than reading those morning so she could study it in preparation for reports? You're wasting so much paper, the the Monday morning sales meeting. The reports next thing I know the environmentalists will be picketing the place," exclaimed Max Chernak. Seal SFA program. Douglas typically spent one to two were automatically generated every week by the Rite Envelope Company's new president. He had stopped by the office of Rose Douglas, the firm's Sunday afternoon. hours carefully going through the report every sales manager for the past seven years, to visit with Douglas felt obliged to defend her system for her. His opening remarks were a reaction to the two- foot-high stack of SFA reports spread out in front of analyzing sales. "I find it helpful to have the facts Douglas on her desk she stopped scanning them about what has happened before I go into my and looked up as Chernak walked in. weekly sales meeting every Monday morning. I Chernak was smiling as he commented on the know who is selling and who isn't. I know what pile of paper before her, but Douglas had been is selling and what isn't. And I know how much every wamed previously by an acquaintance who had wete making on everything we sell and worked for Chernak in another company that he order." was not a big believer in paperwork. She recalled "I see. Knowledge is power that it?" the words, "He likes to keep things simple. He Chernak asked. doesn't spend much time in his office. He always Douglas nodded slightly understood she seems to be around. Delegation is not one of his defending her system, considering that she hardly was under attack. Had she been too aggressive in favorite concepts." The Seal Rite Envelope Company of St. Louis, knew Chernak? She wondered. Missouri, manufactured and distributed a wide The new president was not a person who line of paper envelopes of all weights, sizes, and avoided confrontation. He rose to the challenge. paper stock. Its sales force sold to printers, paper OK! I see that something is highlighted on that wholesalers, and large organizations with their page you're looking at. What is it?" own operations throughout the Midwestern states. "Well, it seems that the sales of item number Douglas was rather proud of her sales analysis 2510 are down significantly for the month com- system, which she had developed using data from pared to last year. We sold hardly any of it last the company's sales force automation (SFA) pro- week. Let's see, 2510 is our heavy-duty, brown, gram. All sales orders were classified by the stock 12-inch by 18-inch mailing envelope, Douglas numbers of the products bought, who bought said as she read from the reports. them, who sold them, when they were bought "So what?" and how much gross margin was realized from "What do you mean, so what?" the order. The data were for the previous week Chernak said, "I mean, so what? So what is the and previous month, all compared with sales for significance of that information? So what are you the same periods the previous year. Any signifi- going to do about it?" cant changes in performance were automatically Douglas knew she was in a bit of trouble, but highlighted for her attention by the program. A she could not back down. "I'll make inquiries of report of each week's sales orders and shipments the sales force to see if any of them has an explana- tion. Is something wrong with our product or its Scan 418 Chapter 14 Sales Volume Analysis pricing? Is it just a random event? Does it reflect a she took care of the details, the totals would take change in market requirements? I'll keep my eye care of themselves. She had found that by having on it to see if anything develops that warrants tak- good, recent information about all aspects of sales, ing some action." she gained power in the organization. Her people Chernak replied, "That's what I call micro- had learned not to challenge her since she could management. How many of such items are there always pull out data to support her position. She in that report that will require you to do some wanted people to know that she was on top of her thing? Don't answer that! I'm afraid of the answer. job. We seem to be on different wavelengths. I only Douglas decided to think about the matter for want to know a few things, such as our gross mar- a while and ask some other people about her sys- gins by broad product lines and by salesperson tem before doing anything about it. As she looked And, of course, I want to know total dollar sales, at the stack of paper in front of her a troubling gross margins, and expenses. But I would lose all thought crossed her mind. Was she spending too perspective if I had to deal with that volume of much time analyzing these SFA reports? Was it all information you are processing each week. And worth it? what about the costs? Are they worth it? Well, as long as the profit performance of your operation Questions: keeps doing as well as it has, you can stare at that 1. How should Rose Douglas evaluate the paper as long as you like if that's the way you get effectiveness of her sales analysis system? As Chernak left her office, Douglas was a 2. What would you recommend she do in bit upset by the president's attitude toward her response to the situation in which her boss sales analysis system. She had been taught that if obviously disagrees with her attitudes toward analyzing SFA reports? your kicks." 21 ail.com